Like the country as a whole, Iowa has a Republican chief executive and a Republican-controlled legislature that creates problems where they need not exist, problems that look like the effects of incompetence so long as it is assumed that the interests of the state are a priority. It can surprise no one that, the party being what it is these days, Republican domination has produced the kind of lawmaking that brands itself as populist and foregrounds supposedly populist reforms: Fireworks now available everywhere! Guns! Guns! Guns! Needless to say, these populists have acted to prohibit cities and counties from raising the minimum wage and have cut back on workers’ compensation. All this is consistent with the agenda of a national movement observable in many states, always associated with the influence of outside money. And it is strikingly at odds with the situation in Iowa, which makes the peculiar features of the agenda stand out.
Wages have been depressed by legislative fiat to make the state competitive with neighboring states, or so we are told. This is such a familiar argument that it can pass unexamined. What is at stake in this competition? Iowa has an unemployment rate so low as to be another kind of problem from the one that has plagued the Rust Belt and Appalachia. Unlike other states, which need jobs, Iowa needs workers. It should be competing with other states for population. Obviously, from this point of view, a low minimum wage is a terrible idea, a disincentive. Iowa needs to attract young people and retain its own young, including people who take entry-level positions or whose incomes are affected by the baseline the minimum wage should establish.
This depression of wages is pro-business, so we are told. Business in Iowa, putting aside the giant corporations dealing in corn, soybeans, and pork, whose consumers are likely to be in China, is largely of the Main Street variety, the kind that prospers when locals have some spending money. Twenty-four hundred Iowans — around 1 percent of the population — earn minimum wage or something close to it, a number that is clearly large enough, at least in the eyes of the legislature, for them to see a rise in it as a threat to the state economy.
Just for the sake of argument, let us say that the depression of wages actually is good for business, as Republicans claim. Does this practice amount to anything more than taxing one part of the population to subsidize another part, the second of these by definition more prosperous than the first? If work is systematically undervalued, then the difference between what a worker earns and what she is paid amounts to withholding without the paperwork. Should the poor be kept poor to sustain businesses that would not survive or flourish without this subsidy? It appears from the argument of the legislature that the acumen and rigor they attribute to private enterprise in other contexts is not sufficient to keep the doors open or the lights on. The truth is that low wages lead inevitably to low levels of consumption, which means that they are business-hostile. Adam Smith pointed out that a worker’s labor is his patrimony, a kind of property that, over time, is diminished by use. Therefore it should have the protections enjoyed by other property, and should be allowed to find its actual value in the market, without government interference. Republicans are forever making arguments from the rights of property, and from the sacred principle that you should be able to keep what you earn. But their perspective is so narrow that it always falls short of justice and amounts first and last to self-interest.
Since neither soybean fields nor Main Street shops can move to Mexico, the idea of competition is not relevant to Iowa’s situation. The wage policies being imposed are not appropriate to this state, and are instead suited to economies that possess labor-intensive manufacturing of the kind that would compete with its like in a world market. It would make much more sense to raise wages so that American workers could afford to buy American products. These policies reflect an ideology, a social vision, rather than any engagement with the state itself; they are imposed because legislators have a loyalty to ideology that makes them open to meddling in the state without much interest in the particulars of its life or culture.
The latest budget makes more severe cuts to higher education than to prisons — predictably. Education is a major asset of the state, central to the culture of the place from its beginning. The Iowa crime rate is far below the national average. These legislative choices do not respond to Iowa, but then they need not really claim to, since the legislature can always invoke the specter of a budget shortfall and make cuts where it will. For governments of the Republican persuasion, incompetence can have very great rewards. A budget crisis trumps all other claims and considerations. It is a golden opportunity for Republicans to shrink government and look tough and prudent as they do so. Higher wages, a better environment, and better schools could keep people here, attract newcomers, and strengthen the economy more sustainably than prisons and fireworks will do. But for all the talk about intrusive government, real and sustained prosperity would lessen the power of the politicians who are happiest dealing in the kind of triage that allows them to cut away at whatever they consider undesirable. The most extreme or the most candid of them cast a cold eye on government itself.
The great question for any human population is, through what channels will power flow? Power itself can be assumed, because people collaborate and people create wealth. If a society has a politics, it has put power under some measure of control. Our strange late capitalism does not recognize the legitimacy of social constraints on wealth. Social norms, as far as they distribute wealth, are treated as concessions to weakness, whereas financial success is worthiness made manifest. At every level, government in this country has been weakened, having been represented for decades as a threat to freedom. So, increasingly, we have government by money, given or withheld, and not only because of the influence of money in our elections. To say the least, these interests are much less accessible to the force of public opinion than the old regime ever was.
It seems that Iowa can look forward to an immense budgetary shortfall in the next year, because the darnedest thing has happened. The governor privatized the administration of the state’s Medicaid system, contracting with three out-of-state firms to do the work. Both sides in this arrangement somehow underestimated the costs involved by hundreds of millions of dollars, so the state will be obliged to make up the difference — with, it is hoped, assistance from the federal government. Considering that Republicans are supposed to be so savvy in these matters, not to mention the businesspeople who offered their expertise, their skills, and their efficiencies, it seems these estimates really should not have been off by enough to have led to a catastrophic deficiency. This suggests a degree of fecklessness not approached by, say, the purchase of a new iPhone, that notorious sin of the poor. The case is different, of course, when help is so near at hand, in the pocket of the Iowa taxpayer or, in a pinch, the Connecticut taxpayer. But hope that this Congress will rush to shore up Medicaid may be misplaced.
We know already that sacrifices will be necessary. In fact, some are already being made. There have been problems around paying the people who actually provide Medicaid benefits. And the recipients have been thrown into uncertainty and disruption. It is difficult to see how all this could have anything but a negative impact on the economy, unless through a reduced provision of Medicaid, emergency having created a new norm. No doubt the burden could be reduced more effectively if the legislature stopped depressing wages. Programs like Medicaid are in great part a grudging payback for that silent tax that is supposed to make Iowa business prosper. In all fairness, the governor insists he looks forward to a savings of $110 million, once this privatization settles in. I hope this time someone has checked his arithmetic.
In any case, major policy will flow from this debacle, fortuitously policy of the kind that promotes small government — small by one definition, since as political government recedes the people are more and more exposed to changes they did not choose but are told they must accept as inevitable.
Iowa has a good, rich culture and an admirable history. The legislature seems to see a parasitic future for it as one of those state-line marketers of things its neighbors have tried to exclude. No doubt the giant billboards are about to go up. Fireworks! Our triumphant gun lobby foresees a time when guns in Iowa will no longer even need to be registered. Living here, it is hard to imagine where the market for them will be, that so many people would feel any need to arm themselves. Then again, we are near Chicago.